Standard Chartered warns of 'challenging' outlook

MargotPatrick

LONDON-- Standard Chartered PLC on Wednesday warned that its first-half results are under pressure as emerging markets remain volatile and the bank works on reshaping its business.

Standard Chartered, which generates about 90% of its profits in Asia, the Middle East and Africa despite being based in London, said it expects the first six months of 2014 to be "challenged both at an income and profit level."

The warning came as the bank posted a 7% fall annual operating profit for 2013, to $6.96 billion from $7.52 billion in 2012. Net profit fell to $3.99 billion from $4.79 billion, reflecting a rise in sour loans and a $1 billion write-down in the value of the bank's South Korea business.

"Given the weakness of our performance in the fourth quarter of 2013, we anticipate that the first half of 2014 may prove challenging. However, we are confident that the actions we are taking will give us the platform to deliver sustained and profitable growth," said Chief Executive Peter Sands.

Mr. Sands laid out a plan in November to exit some businesses and pull back on hiring to cope with faltering growth and the effects of harsher global banking rules. A long-standing target to increase revenue by at least 10% a year was cut to between 7% and 9% for the next couple of years.

Standard Chartered's South Korean retail bank played a big role in the lower profit figures. In addition to the revaluation, the unit produced lower revenue and higher bad loans in the year, for a $162 million operating loss.

Bad loans across the entire bank rose to $1.62 billion, from $1.2 billion in 2012.

The bank had warned in December that operating profit would fall in 2013--the first full-year decline since 2001. In addition to the measures announced by Mr. Sands in November, the bank said in January it would merge its consumer and wholesale banks and focus its activities around three customer groups: corporate and institutional; commercial and private banking; and retail.

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